Taking Advantage of Trump Accounts & the One Big Beautiful Bill Act

A large and multi-dimensional tax and spending bill called the One Big Beautiful Bill Act was signed into law last year. While the bill has a multitude of provisions, one aspect offers a new opportunity to invest in the financial future of children through “Trump Accounts.” 

But, what does this mean for families and how can parents take advantage of this program?

What are Trump Accounts?

Trump Accounts are long-term investment retirement accounts for children under 18, meant to provide them with a financial headstart for retirement. Time is one of the most valuable wealth-building tools when it comes to investing. Opening an account when a child is born gives them the ability to accrue savings and compound interest in their name, without having to wait until they start working.

Based on the current structure of Trump Accounts, eligible children under the age of 18 can have an account opened on their behalf. Contributions are invested in the stock market with the hope that returns match typical market growth. Investments for Trump Accounts are limited to low-cost, US-based index mutual funds or ETFs, with an expense cap and no leverage.

How do Trump Accounts work?

• Deposits and Withdrawals: Before a child is 18, any money contributed to a Trump Account cannot be accessed at all regardless of the intent. Once a child turns 18, the account follows Individual Retirement Account (IRA) rules.

• Government Seed Money: Any child under the age of 18 can have an account opened for them. But, for children born between 2025 and 2028, the Treasury Department will make a special one-time contribution of $1,000 to the account.
• Annual Contributions: Accounts are eligible for annual contributions; for 2026, contributions are capped at $5,000.
• Funding Sources: Money can come from friends, family, or employers, but it all must be deposited in the child's account. Grandparents, for example, cannot set up an account on behalf of a childchild. Some private foundations have also voiced interest in participating through contributions.
• Account Transition at Age 18: Once a child turns 18, the account begins to follow Traditional IRA rules, while still remaining a Trump Account. At this point, the distributions are considered taxable income. Underlying contributions will be taxed depending on their sources. The child themselves now owns the funds and can take money out for education or a down payment on a house (non-qualifying withdrawals may carry a 10% penalty). Ideally, the money will stay invested and continue to grow for the account owner’s retirement. Owners do have the option to roll funds into an IRA but this won’t happen automatically.

Practical Advice for Families

Individuals do not receive a tax deduction for their contributions to a Trump Account, as they would with a traditional IRA. However, contributions from the government, employers, or charities may be treated differently for tax purposes. When funds are withdrawn, any untaxed contributions and investment earnings will typically be subject to income tax.

Families should be aware that Trump Accounts are not available quite yet. They become active on July 4th, 2026. However, parents can still fill out an application to receive activation information. More information is available on IRS Form 4547 or at the trumpaccounts.gov portal.

Keep in mind that Trump Accounts are just one way to support your child’s future. There are many different investment accounts that parents can use. Some focus on education, like 529s. Others, such as a Custodial Roth IRA, can only be used if their child has earned income.

If you’re considering opening a Trump Account, look at it as one part of a whole financial picture for your child’s future. Rely on your family’s values and choose the investment tools that best align with your goals for your child. 

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